Two Methods of Debt Payoff
My wife and I bought a new truck early in our marriage. She hated making those monthly payments, so we resolved to pay it off as fast as we could. You can too!
Like Ann, maybe you’re sick and tired of your debt. You’ve come to understand that the borrower truly is a servant to the lender.
If so, stop borrowing immediately, develop the habit of spending less than you earn, and decide how to pay off your loans. There are two methods that work well to get you out of debt quickly.
The first is the debt snowball method. With this approach, you list your debts from smallest to largest. You put all extra cash towards paying the smallest debt off first and continue to make minimum payments on all other debts. Once the first debt is paid off, you move on to the next, applying all the money you were using to pay the first one off to the second!
It’s simple, requires no formulas and motivates you with each debt elimination.
The second method is called the debt avalanche method. Instead of paying off your debts from smallest to largest balance, this method pays off your debts from highest to lowest interest rates.
It will also save you time and money since interest rates are one of the greatest costs associated with debt. But, if the highest rate is also your highest balance, it may be hard to stay motivated without the psychological benefit of eliminating other debt first.
Pick the method that works best for you – and that you know you can stick with!
Both methods require dedication and the desire to break free from financial bondage. So whether you snowball or avalanche, my hope is that you’ll owe nothing to anyone except to love one another.
And if you’re struggling with overwhelming credit card debt, get in touch with Christian Credit Counselors. They can help you formulate a plan to pay off all your cards quickly! Learn more by calling us at 800-722-1976 or online at crown.org/ccc